Economics Question

Frank Rice Ltd is an Australian company which exports rice to various countries across the world. The founder and owner of this company is Frank L, a young and successful businessman. Assume that the international market for rice exporting is a perfect competition market. 

Required: 

(a) Clearly explain how Frank sets the price and decides how much quantity of output to produce. How much economic profit does Frank tend to earn? Clearly explain

(b) In late March and early April 2020, the governments in various rice exporting countries such as Cambodia, India and Vietnam moved to impose an export ban on rice. This was prompted by food security concerns caused by the COVID-19 pandemic. As long as this ban was in effect, rice producers in those countries were prohibited from exporting rice overseas. Clearly explain how this event would affect Frank’s rice exporting business (which is based in Australia) in terms of price, quantity and profit?

(c) The rice export ban as mentioned in (b) were eventually lifted in mid April. Rice producers from Cambodia, India and Vietnam returned to trade in the international rice market as usual. Clearly explain how the removal of this ban would affect Frank’s business

(d) Since his business operates in a perfect competition market, Frank, most of the time, earns zero economic profit. If Frank is determined to earn some economic profit, what should he do? Clearly explain

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